With the budget proposals bringing all classes of air travel in the service tax net, both domestic and international travellers will have to shell out more.
“The scope of air passenger transport service is being expanded to include domestic and international journeys in any class,” said the memorandum explaining the provisions of the 2010-11 Finance Bill, presented by Finance Minister Pranab Mukherjee in the Lok Sabha on Friday.
So far, service tax was imposed only on international travel on First and Business classes. The government, however, proposed to exclude from the taxable value the statutory taxes charged by foreign governments, it said, indicating airport taxes charged at foreign destinations.
The definition of ‘airport services’ was also being amended to include all services provided within the airport premises. An authorisation from the airport authority “would not be a pre-condition for taxing these services,” it said. The Finance Minister announced that the rate of tax on services would be retained at 10 per cent. Certain services hitherto untaxed would be brought within the purview of service tax levy. These services would be notified separately.
The budget made a provision of Rs. 1,200 crore as equity infusion for bailout package for the crisis-ridden National Aviation Company of India Limited (NACIL), holding company of Air India, in the next fiscal as part of its financial restructuring process. Air India will soon receive Rs. 800 crore as the first instalment of the equity infusion, which was cleared by the Cabinet recently.
